US President Joseph Biden has announced he wanted Republican lawyer Jerome Powell to stay at the helm of the United States Federal Reserve (Fed) for a second four-year term.
Biden's announcement has thus ended all speculation as to whether the Democratic head of state would keep someone from the opposition in suck a key position or if he would instead give in to pressure from his own political party to choose someone from their own ranks such as Lael Brainard, who was nevertheless chosen to become vice president of the most influential central bank in the world.
Powell has provided strong leadership during a period of unprecedented challenges, including the largest economic contraction in modern history, the White House said in a statement.
We cannot just go back to where we were before the pandemic, we need to better rebuild our economy, Biden said in the document, as he showed confidence in Powell and Brainard to keep inflation low, prices stable, and make our economy stronger than ever.
Inflation closed in October with a 6.2 percent rate, the highest in three decades for the United States. The Fed insists that it is a transitory phenomenon, although it acknowledges that it will last longer than anticipated. We will use all our tools to support the economy and the strong labor market, and prevent further inflation from taking hold, Powell said at a White House event with Biden and Brainard, in his first public statements after the nomination.
Powell also led a change in Fed policy to keep interest rates lower for longer than normal to stimulate full employment, particularly for minorities who are often disadvantaged. Unemployment among black Americans is still more than double that among whites, a disparity Powell always mentions in his public appearances.
Powell, 68, was first appointed by former President Donald Trump in 2018, when the decision not to give Democrat Janet Yellen a second term, although he later regretted the move.
Biden has focused on getting congressional approval for a gigantic welfare bill that would spend $ 1.8 trillion in ten years. To do this, he needs the votes of almost every Democrat, and appointing a Fed chairman capable of taking a tougher line on banks and climate change could be seen as a way to build support among progressives. In that sense, the president stressed on Monday that the Federal Reserve must be a leader among central banks worldwide to address financial risks related to the climate.
A native of Washington, Powell is an attorney who graduated from Georgetown University. A former partner from 1997 to 2005 of the giant US investment fund Carlyle, he is one of the richest people to have run the central bank. At his confirmation hearings in 2018, he declared a fortune of $ 18 million to $ 55 million.
The Republican Fed chair, whose four-year term expires in February, is backed by Republican lawmakers and Treasury Secretary Yellen but has drawn criticism and opposition from some progressive Democrats due to Fed officials' controversial stock trading during the pandemic.
Powell has taken too many actions to weaken the Fed's oversight of our largest banks and deregulate Wall Street, and renominating him for another term is not a risk worth taking, Democratic Senator Elizabeth Warren, who also opposed Powell's nomination in 2018, said in an earlier hearing.
Republican senators, despite disagreeing with Powell on inflation and other issues, are concerned that a replacement could be more liberal, and would likely support Powell's second-term confirmation.
Powell's new term as a member of the Board of Governors will expire on Jan. 31, 2028, while Brainard took office as a member of the Board of Governors of the Federal Reserve System in June 2014 and his term ends Jan. 31, 2026.
Earlier this month, Federal Reserve Governor Randal Quarles said he would resign at the end of December, giving the Biden administration three open spots on the central bank's seven-seat Board of Governors. Federal Reserve Vice Chairman Richard Clarida's term as governor expires early next year.
The seven-seat Board of Governors sets interest rate policy with the central bank's 12 regional bank presidents, five of whom can vote on policy meetings. Regional bank presidents rotate through their voting seats, but the New York Fed has a constant vote.
In September, two Fed regional bank presidents, Boston Federal Reserve Bank President Eric Rosengren and Dallas Federal Reserve Bank President Robert Kaplan, resigned from their posts amid controversy over stock trading during the COVID-19 crisis.